The Ministry of Finance has announced the 19th weekly instalment of Rs. 2,104 crore to the States to engage the GST compensation shortfall. Out of this, an amount of Rs. 2,103.95 crore has been acquitted to 7 States and a proportion of Rs. 0.05 crore has released to the Union Territory of Puducherry. In this article, we will talk about the GST compensation shortfall released to states.
GST compensation shortfall released
The Central Government has released the 19th weekly instalment of Rs. 2,104 crore to the States to address the GST compensation shortfall. Out of this, a proportion of Rs. 2,103.95 crore has been released to 7 States and a quantity of Rs. 0.05 crore has been released to the Union Territory of Puducherry.
Till now, 96 per cent of the total measured compensation shortfall has been acquitted to the States & UTs with Legislative Assembly. Out of this, a proportion of Rs. 97,242.03 crore has been released to the States and a proportion of Rs. 8,861.97 crore has been acquitted to the 3 UTs with Legislative Assembly.
Also, the Government of India had established an outstanding borrowings window in October 2020 to meet the approximate shortfall of Rs. 1.10 lakh crore in income occurring on account of implementation of GST. The borrowings are being attained through this window by the Government of India on behalf of the States and UTs.
Further Clarification by GST Council
Under the special window, the Government of India has been borrowing in Government Stock with a term of 3 years and 5 years. The borrowing created under each tenure is equally allocated among all the States as per their GST compensation shortfall.
With the existing release, the commensurate pending GST shortfall with respect to borrowing under 5 years tenor has been determined for 23 States and 3 UTs with the legislature. Persisting 5 States have not GST compensation shortfall.
In addition to furnishing funds through the special borrowing window to meet the shortfall in earnings on account of GST implementation, the Government of India has also granted additional borrowing authorization equivalent to 0.50 % of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to assist them in mobilising extra financial resources.
All the States have provided their preference for Option-I. Approval for borrowing the entire following amount of Rs.1,06,830 crore (0.50 % of GSDP) has been granted to 28 States under this requirement.
The amount of following borrowing permission consent to 28 States and the number of funds put up through the personal window and released to the States and Union Territories so far is annexing.
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